By Beth Mattson-Teig
The big selling point of continuing care retirement communities (CCRCs) is the full spectrum of senior living options offered on a single campus. And in an era when healthcare costs are rising faster than the overall inflation rate, operators are offering more options to residents to pay for that continuum of care.
Fee structures are evolving along with the resort-style services and amenities offered at today’s senior living communities that range from fine dining and juice bars to travel clubs and golf simulators. Operators that are working to capture a bigger share of the aging baby boomer population are competing for prospective residents with a variety of fee structures that include entrance fee, rental and modified or hybrid models.
Although opinions remain firmly split on whether the entrance fee or rental contract is the preferred choice, most agree that each comes with different pros and cons that, collectively, are attracting more residents to CCRC communities.
“We think there is room for multiple different contract types and offerings,” says Lisa McCracken, head of research and analytics at the National Investment Center for Seniors Housing & Care (NIC) headquartered in Annapolis, Maryland. “They each appeal to residents in different ways. Having options and choice can put an organization and community in a position of strength,” she says.
Overall, the CCRC sector is experiencing a steady recovery in the wake of the COVID-19 pandemic. The occupancy rates are above 90 percent across the independent living, assisted living and memory care segments, while skilled nursing occupancies are hovering between 87 and 88 percent.
Occupancies also are likely to rise given the favorable demographics — the first wave of baby boomers will turn 80 in 2026 — and scarcity of new supply. “There are a limited number of new communities under development and many of those projects are looking at models without the skilled nursing segment,” adds McCracken.
The Rise of Rentals
The newer kid on the block is the rental CCRC. Some industry experts argue that this model has more growth potential because of its lower initial cost. Rent is typically paid monthly, and most communities do not require an upfront fee. In contrast, entrance fees for CCRCs can range from $100,000 to more than $1.5 million, with many seniors using proceeds from the sale of a home to pay the fee.
Recent high-profile bankruptcies have raised concerns about the financial risk of entrance-fee CCRCs among consumers. “The CCRC bankruptcies caused by COVID have definitely left a sour taste in the mouths of some potential residents,” says Avi Satt, CEO of Encore Healthcare Services, a CCRC operator with more than 2,000 beds across the independent living, assisted living, memory care and skilled nursing segments. In some cases, residents or families lost all or part of their refundable entrance fees.
One such bankruptcy that made headlines was the 2023 Chapter 11 filing of Friendship Village in Schaumburg, Illinois, which is the largest CCRC in the state with the capacity to accommodate 1,000 residents. The operator ran into liquidity problems during the COVID-19 pandemic following a surge of move-outs. Similar to a run on a bank, there were insufficient funds to refund fees with no new residents coming in.
Encore Healthcare Services bought the property out of bankruptcy, changed the name to Encore Village of Schaumburg and switched the business model to a rental program. Oftentimes, the problem is not with the entrance fee model itself, but rather the lax rules and regulations in some states that govern how the refundable portions of fees are managed, notes Satt.
Some states have very strict regulatory rules when it comes to entrance fees and what operators can do with those funds. Florida, for example, requires that a majority of the refundable portion of the entrance fee be placed in an escrow account. Additionally, escrow funds must be managed by a Florida-chartered bank, savings and loan or trust company and kept separate from the operator’s funds.
“We believe that the rental model is a more sustainable model long term, especially when considering the potential for another COVID or a strained financial market,” says Satt. That does not mean that entrance-fee communities don’t work, as industry data shows that those communities are stable performers, he says.
“However, having been involved with purchasing multiple entrance-fee communities that failed, we have kept our focus on what we do best and what we feel is the safest model going forward,” adds Satt. Friendship Village is the fourth CCRC that Encore Healthcare Services has acquired out of a bankruptcy situation.
Entrance Fees Offer Security
Despite competition from rental alternatives, the entrance-fee model remains fairly entrenched in the industry. Entrance-fee CCRCs tend to attract seniors who are planning ahead and want stability and predictability of care as they age. Some compare it to having many of the same benefits of a long-term care insurance policy.
Acts Retirement-Life Communities is one long-time advocate of the entrance-fee model. The not-for-profit operator has offered what it refers to as its “Type A” (all-inclusive) entrance-fee contract since it opened its first community in 1972. Although Acts also offers Type B (modified contracts) and Type C (fee-for-service) contracts that have lower upfront costs and higher fees as care increases, the Type A contract remains the contract of choice for most of its residents.
“For those who are thinking more broadly about this next chapter and want a plan that’s going to cover them for their life, the Type A contract checks all those boxes,” says James Petty, chief strategy officer at Acts Retirement-Life Communities, one of the largest not-for-profit senior living organizations in the U.S.
About 85 percent of the contracts Acts sells at its communities are Type A, with occupancy across its portfolio of 28 communities, including occupied and sold units, currently at 97 percent.
In a typical entrance-fee contract, a resident pays a substantial upfront fee in addition to monthly fees. In exchange, residents receive unlimited access to any type of care they require — from independent living to assisted living to memory care to skilled nursing. The main advantage is that rates are fixed as residents transition to higher levels of care, although monthly fees may increase due to inflation.
“Many of our prospects and residents say that they prefer the predictability of entrance-fee contracts, along with the long-term value and security,” says Gregg Colon, chief operating officer at Erickson Senior Living, an owner, developer and manager of CCRCs with 20 communities that are home to approximately 32,000 residents.
Most Erickson Senior Living-managed communities offer partially refundable entrance-fee models. Residents pay the one-time entrance fee when they decide to move in. At many of its communities, if a resident leaves the community, between 80 and 90 percent of that entrance fee will be returned to the resident or their beneficiaries.
In addition, some of its communities also offer a declining balance entrance fee, which provides the option for a lower upfront cost than the partially refundable contracts. In a declining balance contract, the amount of the entrance fee that is refundable decreases each year based on a set schedule.
“We continue to see both models as options in today’s market because they cater to different customer needs. However, in terms of occupancy and growth, entrance-fee CCRCs appear to be emerging as the preferred model,” says Colon.
How Performance Stacks Up
Entrance-fee CCRCs have consistently achieved higher and more stable occupancies compared with rental communities. Second-quarter data from NIC shows that entrance fee CCRCs outpaced their rental counterparts in occupancy rate across all care segments.
The highest occupancy levels were in the independent living segment: 93.5 percent for entrance-fee properties compared with 91.1 percent for rentals.
The main reason for the outperformance in entrance-fee versus rental CCRCs is the two payment models attract different residents.
“The entry-fee consumers often have a longer decision-making process and typically enter the continuum at the independent living end of the spectrum,” explains McCracken. “With the significant upfront financial investment, they are also less likely to move out and generally have longer lengths of stay compared to a straight rental senior housing option.”
Both entrance-fee and rental CCRCs have experienced strong occupancy growth coming out of the pandemic, climbing back from lows that dipped to about 85 percent.
“While the entrance-fee CCRC model looks like it might be ahead by a percentage point or two, the growth in rental CCRCs also has been fairly strong,” says Justin Robins, executive vice president and chief operating officer at Chicago-based Senior Lifestyle Corp.
The company operates more than 11,600 units across 100 communities nationally, six of which are rental CCRCs. Senior Lifestyle ranked as the 11th largest operator of U.S. seniors housing as of June 1, 2025, according to the American Seniors Housing Association.
Occupancies within assisted living and memory care units at Senior Lifestyle’s six rental CCRCs are now above average entrance-fee occupancies, which are just under 92 percent, according to NIC.
“That data might imply that the consumer who’s choosing rental CCRCs is moving into a community later in the continuum — maybe going straight to memory care or assisted living,” adds Robins.
Fee Models Continue to Evolve
One trend across the CCRC industry is a growing menu of contract options and some blurring of the lines between entrance-fee and rental models in the form of modified or hybrid contracts. In part, that shift is due to the recognition that both models have advantages and disadvantages, and operators need to offer more choice and flexibility to today’s consumers.
For example, while Encore Healthcare Services operates rental CCRCs, it also sees the benefits the entrance-fee model offers in creating more engaged residents and improving cash flow.
“When people do pay an entrance fee, they tend to feel like they own a piece of the community, and they get more attached to it,” says Satt. “People really want the communities to be successful because it benefits them.”
Encore recently introduced a nonrefundable entrance-fee option — typically around $100,000 — that it plans to roll out across its communities over the next 12 to 24 months. In return, residents receive discounted rates and perks across various services, such as extra monthly credits to purchase food or cleaning services.
Encore estimates that the average payback to residents who pay the entrance fee will be between four and five years. Discounts also will continue through the continuum of care with the potential for bigger savings as seniors move into assisted living or memory care where costs are higher. The benefit for Encore is that it improves cash flow and valuation of the business.
Although the nonrefundable entrance-fee option is still fairly new, the hope is that seniors with a greater financial stake in the community will result in more loyal residents, effectively helping to boost retention and overall occupancy.
Likewise, some operators that have traditionally offered entrance fees are now offering modified contracts that combine lower upfront fees along with a monthly rent or fee component. A number of operators also are taking a hard look at modifying the refundability obligation within the entrance-fee contract.
“There is risk in having high entrance-fee liabilities, and many organizations are trying to reduce the exposure to 100 percent, 90 percent or similar high-refundable options,” notes McCracken.
Elevating the Experience
Another key trend for CCRCs across the board is elevating the overall experience with services, amenities and programming. “The industry as a whole is going to move from selling services to selling experiences,” says Petty. The focus is shifting to what seniors want to get out of this chapter of their lives, and operators need to help residents realize their dreams and aspirations, he adds.
Another common theme across the CCRC industry is to continue to grow programming and wellness offerings with more emphasis on educational programs or organized travel outside of communities to vacation destinations. Residents want socialization and experiences both within a community and outside of that community, notes Robins.
“Continuing to support that social and emotional wellness piece is a great and true value of moving into any retirement community,” he says. For example, whereas fine dining is often a hallmark to many communities, Senior Lifestyle also is adding juice and smoothie bars to its communities.
Elevating the experience also requires capital expenditures to upgrade facilities and add amenities that today’s seniors demand. Encore has spent more than $30 million on upgrades at its CCRCs since 2024.
The company is investing in new amenities, such as adding high-end restaurants, coffee shops, sports bars, pickleball courts, pools, movie theaters, putting greens, golf simulators and bowling alleys.
In addition, Encore’s communities collectively offer more than 750 monthly programs, with a majority that are run by residents.
“Getting old should never be a bad thing or a burden. You would be shocked how quickly a resident goes from sitting in his or her apartment staring at a TV to drinking one too many at our Wine Wednesdays events in the sports bar,” says Satt. “What they paid, or how they pay, should never be a factor in their overall experience.”
— This article originally appeared in the October-November 2025 issue of Seniors Housing Business.